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WHY IS IT IMPORTANT TO PURCHASE TITLE INSURANCE WHEN PURCHASING A FORECLOSURE PROPERTY?
Some of the worst advice given is not to buy title insurance. Some people say a title search is all that's needed. Others think title insurance is one of those overpriced "nice to have" options forced on consumers by hungry insurance agencies. Lastly, some investors mistakenly think that title insurance can't be purchased for foreclosure properties- which isn't true at all. Foregoing title insurance when buying your home is a risky choice - a risk that' is even more compounded when it comes to buying foreclosed properties.
Title Insurance is an insurance policy that protects against future loss should the state of title be any different than when the policy was written. Like other insurances, buying an owner's policy of title insurance is a form of protection against catastrophic events. Title insurance differs from fire or flood insurance. Flood or fire insurance protects you going forward from the day you purchase the policy. Title insurance, on the other hand, protects you from the day you take title on the property against any losses arising from events that occurred prior to the date of the policy. In other words, your coverage ends on the day you purchase the title insurance policy and extends backward in time. Title insurance is a one-time investment. You pay for it when closing on the property - and then forget about it until you need it. Just as homeowners insurance protects your home against catastrophic loss going forward, title insurance protects your investment against loss in the form of undisclosed liens, lawful claims on the property, and fraud that may have occurred prior to you owning the property - that may not have shown up in a title search.
Once you purchase the property, you are responsible for any and all liens on the property - known and not known. quickly wiping out your profit and your bank account if you don't own title insurance.
Why is Title Insurance especially important on foreclosure properties? One of the biggest risks that investors run into is finding out the equity they thought they had when buying a property in foreclosure no longer exists due to liens being discovered once the property is purchased. Foreclosed properties are filled with liens and other title defects because if a person has not paid their mortgage they typically have other financial issues as well.
Fraud is a major issue in the real estate industry and getting worse all the time. With title insurance, your investment is protected 100% should you learn the property was sold to you by fraudulent methods.
Whether you learn title to your property is fraudulent or someone later lays a claim to your property, title insurance ensures you're reimbursed for the amount of your loss and for your legal and/or attorney fees.
You can obtain title insurance from any licensed title insurance agent operating in your state. When choosing a title insurer, it is important that you look for a company with expertise and experience as well as the financial strength to protect you should a claim arise.
We want to thank Attorney James R. Scher, Title Attorney and Jennifer J. Mullen, Title Agent, Escrow Officer of The Title Company of Warren Agency, Inc. for providing us with this valuable information.
When you are ready to call our area "Home" check out the www.wabor.org website for a REALTOR who will help you find your perfect home.